Recession???

Question

I hear talk of a possible recession in Aus, but I was not around when the last one occurred. Can someone tell me what excactly ( I know that it has an impact on the eccomony ) but what sort of impact does it have on the individual or family?

Any info will be helpful thanks

Answer 1

The economy slows down for a while.. as it corrects itself

Answer 2

Most economists define a recession as two quarters in a row with negative economic growth.  That means six months with output going down.  Really that might have no effect on most individuals or families.  If the economy only shrinks by 0.5% that might not mean any loss of jobs, it might just mean some loss of overtime.  More likely it means certain sectors of the economy will be taking major losses and that there will be a few layoffs.  This generally leads to reduced consumer confidence (People start saving more and spending less) which is a bit of a vicious circle...Spending is what drives the economy, and this can make the situation worse.  Governments then try to use their monetary and fiscal tools to get people spending again.

For most people it will have no real effect.  Job security can drop off, people might be scared of getting laid off, but very few will be.  Eventually the economy will get back to equilibrium and on a standard growth path again, and everything will be alright.  Only in really bad cases does it get worse, these can lead to depressions which are the worst of the recessions.

Answer 3

More people are made redundant from their jobs, since firms cannot afford to pay workers as much money due to the slowdown in the economy.

Answer 4

The value of your dollar "receeds", or shrinks back, so you will maybe pay a little more for what you buy until the market corrects itself. It means that things were selling at inflated values, and now they are in the process of returning to what the "accurate" value of whatever it is that you buy.